Wednesday, January 18, 2017

Government unveils Immediate Implementation Action Plan

Deputy prime minister and finance minister Krishna Bahadur Mahara today unveiled Immediate Implementation Action Plan aiming at boosting development spending.
But the action plan, in many places, has promised to establish special purpose agencies or complete tasks on back dates, which could be sheer negligence on part of the government or mere copy paste of the earlier action plans.
Though it has recommended actions and schedule for the concerned ministries and agencies for effective implementation of Mahara's vision, the 'negligence' in preparing the schedule – that are back-dated – has ridiculed the Finance Ministry's working style.
"The government plans to spend at least 80 per cent of the capital budget with the implementation of the Immediate Implementation Action Plan," Mahara said, unveiling the document at a press meet at the Finance Ministry.
If the line ministries do not approve programmes within the first four months, they will not be authorised to spend the budget, Mahara said, adding that the officials, who do not provide enough staff and technical manpower to the projects, will also be punished. "The ministry will deploy a Rapid Monitoring Team for monitoring of mega projects."
The government has not been able to increase capital expenditure due to its eroding institutional spending capacity. By the end of the first half of the current fiscal year 2016-17, the government agencies have been able to spend only 11.30 per cent of the total budget allocated for development spending.
According to the Financial Comptroller General's Office, the government has been able to spend only Rs 35.25 billion of the allocated Rs 311.94 billion in the first six months of the current fiscal year, lower than the average spending of around 14 per cent of the capital budget by the end of the first half of the earlier fiscal years.
Though, resource mobilisation is the key task of the Finance Ministry and spending the capital budget is the primary task of development activities related line ministries like Physical Planning and Transport Minsitry, Energy Ministry and Urban Development Ministry. These ministries have not been able to perform upto the mark putting the pressure on Finance Ministry. "If the ministries are not able to spend the allocated funds by mid-March, they would have to surrender such unspent budget to the Finance Ministryso that the ministry can transfer the funds to the projects that are showing good progress," Mahara added. "The move would ensure that projects with good performance record do not face resource crunch and also prevent rampant mobilisation of resources at the last moment of the fiscal year."
Though, he claimed to have given emphasis on proper implementation of budget – though the action plan – to move forwards with higher growth trajectory, the eroding effective and productive spending capacity of the government agencies have been the key to holding the development back.
"As retarded growth, slow employment generation and huge trade imbalance have long since been identified as the structural problems facing the economy, we need to address these issues to move forward,” Mahara said, adding that effective implementation of budget, acceleration of post-earthquake reconstruction works, incentives for banks and financial institutions to float credit to productive sector and expanding credit to rural families, utilisation of remittance in productive sector through issuing the foreign employment bonds are some priority areas of the action plan.
Mahara also claimed to have prioritised reforms in legal and administrative fronts to harness the results within the stipulated timeframe.
The finance minister has claimed that the government will form a separate agency to implement mega projects including Budhigandaki Hydropower Project, Kathmandu-Tarai Fast Track, Second International Airport, Postal Highway, Smart City, Health Insurance and Social Security, and also to institutionalise the mechanism for mega projects. But Mahara neither elaborated on the modality of the agency, nor explained how the agency will work. He simply claimed that the agency will be formed within January 15. But there has been no sign of such agency even though it's already January 18. This gives enough room to doubt the implementation of programmes outlined in the action plan.
Though, Mahara himself is not convinced about the immediate implementation of his Immediate Implementation Action Plan, he said that it would help change the mentality of the bureaucracy as they have been working under a tunnel of laws and rules. "For development, we have to envision some methods that can implement projects in a fast track mode," he added.
Likewise, the action plan – filled with popular slogans and no better than the earlier ministers' paperwork – has also claimed to cancel the agreements with contractors that have been slow in implementing projects. "Such contractors will be blacklisted and deemed ineligible to bid for government tenders again," it reads, adding that the ministry, now onwards, will select only the projects that have undergone the 'Project Readiness Filter'.
Though, the finance minister claimed that his action plan will heal all the economic ills concerned with low growth, slow capital expenditure, supply-side constraints, lack of employment generation, lack of access to finance, ineffective utilisation of foreign assistance, it could be only on the paper as the implementation capacity of the government agencies have – in the recent years – witnessed an erosion due to excessive political bickering, nepotism and red-tape.
However, the 63-point ambitious action action plan envisages construction of Kerung-Kathmandu Railway Project, Kathmandu Valley Metro and Mono Rail Projects, Electric Railway Project, Second International Airport at Nijgad, reservoir-type hydroelectric projects with installed capacity of 300-500 MW and expansion of East-West Highway under engineering-procurement-construction-financing model. This project development model, it is said, expedites project completion, as a single party has to complete procurement works, build the project on its own and mobilise necessary funds to build the project as well.
The action plan also proposes to provide easy credit access to vegetable farmers, establish labourers’ bank to create database of workers available for different jobs, generate self-employment opportunities for 50,000 people within this fiscal year, create national single window to facilitate overseas trade and establish infrastructure development bank under leadership of the private sector.